Sri Lanka takes price ceilings off 3 and 6 month bills in weekly sale
ECONOMYNEXT – Sri Lanka has taken off the price controls on 3 and 6 month bills at an auction on February 10, but kept the 12-month ceiling on 12-months in a notice sent by the state debt office.
The debt office still kept the 12-month ceiling rate at 5.05 percent.
The price ceiling functions as a de facto ‘cut-off’ yield as if it was a standard multiple price auction.
Above the rate money is printed, which then turns paper debt into reserve money, which is then exchangeable for US dollars (forex reserves) in forex markets.
It is generally given to understand that no bids above the 12-month yield would be accepted, market participants said. (Colombo/Feb10/2021)